Mastercard Must Cease Debit-Card Routing Block

Merchants Payments Coalition urges ‘additional enforcement actions’
paying online with debit card
Photograph: Shutterstock

The Federal Trade Commission has ordered Mastercard to cease practices the agency says have illegally blocked merchants’ ability to route ecommerce debit-card transactions over competing networks.

In its ruling, the commission said an investigation found Mastercard’s tokenization of debit-card data and refusal to de-tokenize that data for competitors has prevented ecommerce transactions from being routed over other networks, such as Star, NYCE or Shazam, that can offer lower swipe fees for processing. The agency said that violates the Durbin Amendment, a 2010 law that requires that at least two unaffiliated networks—Visa or Mastercard plus a competitor—be enabled on debit cards and that the merchant be allowed to choose which to use.

Industry watch group the Merchants Payments Coalition (MPC) welcomed the order.

“Main Street businesses thank the Federal Trade Commission for its work to ensure that Mastercard stops blocking competition for ecommerce debit-card payments,” said Doug Kantor, MPC Executive Committee member and general counsel for the National Association of Convenience Stores (NACS). “More than a decade after debit reform became law, it is well past time for Mastercard and also Visa and major banks to drop all of their efforts to undermine debit-card competition. We look forward to additional enforcement actions to ensure that happens.”

The FTC ordered that Mastercard make the primary account number and other data available to competing networks going forward even if has been tokenized. The agency specifically cited Mastercard’s treatment of data from transactions made with digital wallets like Apple Pay and Google Pay as having violated the Durbin Amendment, but the order applies to all ecommerce transactions, including digital wallets and online purchases.

The FTC action, MPC said, follows regulations issued by the Federal Reserve in October clarifying that debit-card routing choice applies to online transactions the same as in-store transactions and said Visa and Mastercard cannot take steps to block routing. Tokenization and other practices have kept all but about 6% of online debit transactions from being routed over competing networks, according to the Fed.

The Durbin Amendment has saved merchants billions of dollars a year in swipe fees, with 70% of the savings passed on to consumers, MPC reported. Debit-card swipe fees cost merchants and their customers $32.6 billion in 2021, with payments processed over Visa and Mastercard’s networks accounting for $28.1 billion of the total, it said.

The Merchants Payments Coalition, Washington, D.C., represents retailers, supermarkets, convenience stores, gasoline stations, online merchants and others fighting for a more competitive and transparent card system that is fair to consumers and merchants.

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